Exam 4: Reporting Financial Performance

Accumulated other comprehensive income would be reported in

Which one of the following types of losses is excluded from the determination of net income in the income statement?

Comprehensive income Oiseau Inc. reported the following for 2020: Net sales............................................ \1 ,470,000 Cost of goods sold.............................. 850,000 Selling and admin expenses ............... 210,000 Loss on disposal of equipment.............. (12,000) Unrealized gain OCL............................ 14,000 Instructions Prepare a statement of comprehensive income. Ignore income tax and EPS. Assume Oiseau follows IFRS.

Characteristics of high-quality earnings Describe the characteristics of high-quality earnings.

Statement of income terminology The statement of income/earnings has many names. Distinguish among the income statement, statement of profit or loss and statement of comprehensive income, and the statement of financial performance.

The first step in the financial risk management process is

A useful statement of income

Income statement, including corrections During calendar 2020, Scone Corporation reported income from continuing operations of $800,000 (after taxes). In addition, the following information, which has not yet been considered or included in the above figure, has been revealed: 1. On December31, 2020, Scone adopted the average cost method of inventory valuation. The company had previously used the FIFO method. The change decreases income for 2020 by $50,000 (pre-tax) and the cumulative effect of the change on prior years' income was a $60,000 (pre-tax) decrease. 2. A machine was sold for $140,000 cash during the year at a time when its book value was $100,000. (Depreciation has been correctly recorded.) 3. Scone decided to discontinue its stereo division in 2020. During the current year, the loss on the disposal of this segment was $150,000 (before applicable taxes). Instructions Present in good form the income statement of Scone Corporation for 2020 starting with "income from continuing operations." Assume that Scone's tax rate is 20% and that 100,000 common shares were outstanding during the year.

Papaya Inc. has 100,000 common shares outstanding and has a policy of paying a $1.30 annual dividend for each of these shares. Papaya has an income tax rate of 35%, and its retained earnings statement for 2020 reported a closing balance of $1,452,000. Assuming an opening retained earnings balance of zero, dividend payments according to its usual policy, and no other adjustments, Papaya's 2020 net income was

Which of the following statements regarding high-quality earnings is NOT true?

Comprehensive income terminology Explain the difference(s) between other comprehensive income, comprehensive income, and accumulated other comprehensive income.

The following items were among those reported on Harry's Ltd.'s income statement for the year ended December 31, 2020: Legal and audit fees........................... \2 00,000 Rent for office space.......................... 470,000 interest on inventory loan.................... 496,000 Loss on abandoned equipment used in operations....... 82,000 The office space is used equally by Harry's sales and accounting departments. What amount should be classified as general and administrative expenses in Harry's multiple-step income statement for 2020?

In 2020, Junction Corporation has cash receipts from customers of $270,000 and cash payments for operating expenses of $168,000. At January 1, 2020, accounts receivable were $30,000; at December 31, 2020 they were $34,400. Total service revenue is

IFRS requires that expenses be presented in the income statement

Calculation of net income from the change in shareholders' equity Presented below is selected information pertaining to Pullman Enterprises Ltd. for last year: Assets, January 1............................... \2 40,000 Assets, December 31........................... 320,000 Liabilities, January 1 .......................... 120,000 Common shares, December 31 ................... 60,000 Retained earnings, December 31 ................ 20,000 Common shares issued during the year.............. 2,000 Dividends declared during the year........... 32,000 Instructions Calculate the net income for last year.

Net income represents

For the year ended June 30, 2020, Harry Corp. reported revenue of $900,000 in its accrual basis income statement. Additional information was as follows: Accounts receivable June 30,2019..................................... \2 00,000 Accounts receivable June 30,2020 .................................... 490,000 Uncollectible accounts written off during the fiscal year.......... 20,000\ Under the cash basis, Harry should report revenue of

The "risk/return" trade-off means

Regarding classification of expenses by nature versus function, under ASPE, an entity is required to

Groucho Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 2020, included the following accounts: Accounting and legal fees......................... \1 40,000 Advertising............................................... 160,000 Freight-out............................................... 80,000 Interest.................................................... 70,000 Loss on sale of long-term investments......... 30,000 Officers' salaries.......................................... 225,000 Rent for office space................................... 220,000 Sales salaries and commissions................... 170,000 One-half of the rented premises is occupied by the sales department. Groucho's total selling expenses for 2020 are